Comair reports marginal increase in diluted headline earnings

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Regional airline Comair has reported a marginal increase in diluted headline earnings per share from 7.9 cents to 8.1 cents for the six months ended December. This was despite revenue shrinking from R1.6 billion to R1.416 billion.

The group performed well during a difficult trading period of continued recession and was able to marginally increase attributable profit by 3% to R33 million, news service I-Net Bridge reports. (comparative period: R32 million).

Comair recently signed a purchase agreement with Boeing for eight new generation B737-800 aircraft for delivery over the period 2012 to 2015 subject to certain financing arrangements being concluded.

In a statement it added that effective financing mechanisms are currently under consideration and shareholders will be informed thereof in due course. “These eight aircraft will be in addition to two B737-800 aircraft recently acquired on operating lease and already flying in kulula colours. The new fleet will deliver significant improvements in operating efficiency, passenger comfort and environmental impact.”

At the end of the reporting period an aircraft previously acquired for cash was refinanced.

Passenger volumes remained constant in a declining market while turnover declined due to lower ticket prices on the back of a lower fuel cost. Cash on hand remained strong at R253 million. “We continued to see the benefit of our cost saving initiatives throughout the company,” Comair said.
“Passenger surveys conducted on both brands confirmed our high service levels, and we achieved further improvement in our on-time performance. On the back of this we were able to increase our market share. We continued to invest in our affiliated businesses with on-line travel showing good growth over the period.

Looking ahead, Comair said there were no clear indications of economic recovery in the local market for air travel, although it did expect the South African market to follow the first signs of recovery seen overseas. “We have embarked on further expansion out of Lanseria to both Durban and Cape Town and were recently awarded further licences into Africa. While we are cautiously optimistic about higher volumes over the World Cup, this may be tempered by the difficulty in predicting patterns of demand and supply and the significant challenge this presents to pricing airline tickets for this month long event,” the airline said.

There was no significant impact on earnings arising from this loan during the reporting period. “Our priorities remain safety, operating efficincy, conservative cash management, and superior customer service while seeking new growth opportunities for both the airline and travel businesses,” Comair said. No interim dividends have been declared as it is company policy to consider one dividend annually, the airline added.

Meanwhile, some airlines are nearly doubling the prices of their initial ticket quotations with the addition of airport taxes, including fuel surcharges and aviation insurance, a Cape Times survey has found. The departments of Tourism and Trade and Industry are calling for an investigation into the transparency of airline pricing structures.

If pricing practices and policies are found to be in breach of the Consumer Protection Act by levying “hidden taxes” they may face regulation,the paper reported. Tourism Minister Marthinus van Schalkwyk called for the probe this weekend and said he was concerned about the effects of airline ticket prices on tourism. Trade and Industry Minister Rob Davies is to make announcements about the probe in the next two weeks.

Last month the Competition Commission initiated an investigation into some major airlines, including British Airways, kulula, South African Airways, 1Time, SA Airlink, Mango and SA Express, for allegedly colluding on prices and pricing strategies to be adopted during the World Cup.

The airport taxes consumers are charged include seven different regulated and non-regulated charges. Acsa charges every passenger on domestic flights R42.98, which increases to R89.47 to flights in Lesotho, Swaziland, Botswana and Namibia. Acsa’s charge for a departure on an international flight is R118.42. The other regulated charges include an SA Civil Aviation Authority compliance charge of R11, an Air Passenger Tax of about R150 levied by the government on international inbound passengers, VAT and a R21 charge by the Aviation Co-ordination Services.

Non-regulated charges by individual airlines include an airline aviation insurance premium and an airline fuel surcharge – often the largest of the additional charges. The Cape Times surveyed several airlines to compare the pricing breakdown given for one-way flights between Cape Town and Johannesburg on Tuesday. Only SA Airways gave a complete breakdown for the charges levied to consumers on top of the basic fare of R660. An additional R450 or 68 percent was added to the fare and consisted of a R274 fuel levy, R70 in airport tax, the aviation compliance charge and VAT of R92.

British Airways listed a base price of R450 with an additional R418 charged for “taxes, fees, charges and surcharges”. The exact additional charges, raising the ticket price by 93 percent, were not mentioned. Mango’s base fee was listed as R599.12 and noted additional taxes of R164.88, or 28 percent of the ticket price.

Both kulula.com and 1time listed their prices as including airport taxes, vat and levies but did give the breakdown. Van Schalkwyk said the lack of transparency and “inconsistent policies regarding cancelled tickets” made it difficult for consumers to compare flight prices. We should investigate airline pricing structures and the range of surcharges levied, to determine the transparency with which ticket prices are quoted, and whether any unfair practices are taking place.”



Pic: A kulula Boeing 737-800. kulula is a Comair brand.